When debt management is at issue, the question comes up: What should I pay off first? Well, there are several different ways to determine the order in which you pay off your debts. The key, though, is to come up with an aggressive debt reduction plan and stick to it.
One way to look at is to pay off the credit cards first. They almost inevitably have the highest interest rates, and you probably actually paid the amount you actually borrowed a long time ago. Every payment you make to a credit card company at this point is probably pure profit for them. Getting them out of the way can be a big relief, and it can help you stop the cycle of simply throwing money at credit card companies.
Next on the list are consumer loans for things like furniture and cars. Also, special payment plans to pay off bills (such as medical bills) fall in this category. Paying those items off early can feel good, and they generally have the next lowest interest rates. Follow that with student loans. Even though student loan interest rates are lower, if you simply pay them off in the 10 to 25 years you are allotted, you will stay pay quite a bit.
And, if your mortgage doesn’t have any prepayment penalties, you can work toward putting a little extra toward that. It will help you build more equity faster, and, as always when you pay of debt as fast as you can, you will save more of your money.